Chris Barton

Technology columnist for the NZ Herald

Web pioneer pulls plug

By Chris Barton

Print preservationists will say he's a hero. Publisher Barry Colman is reverting to what he knows - paper and ink. After two-and-a-half years, the National Business Review's $3 million Web experiment is over.

The official press release says the weekly newspaper "is moving into a new phase of electronic publishing" - PR-speak for pulling the plug. At 5 pm next Thursday, www.nbr.co.nz, one of the country's largest Internet sites, will be offline permanently. The Luddite strikes back.

So, is this just a case of another publisher tired of bleeding money in the new electronic frontier giving up?

No, says Mr Colman, who maintains the site paid its way from day one.

"Even on the week it closed, the advertising more than covered the cost of the operation. On the day of the announcement, Saatchi rang to book a new campaign. It wasn't a financially driven decision at all - it was a strategic one based on whether we could ever sell information on the Net."

After two-and-half years Colman now knows he can't. "We were expecting at least 2000 subscribers by now - we've ended up with 200."

Web advocates will say he was a fool. Back in 1996 his Web site developers, Clearview, were telling him that people on the Net do not much like to pay for news and information.

But Mr Colman believed otherwise.

When the site launched, some of the information such as the Reuters news feed was free. But full access to NBR for example cost $29 a month - the same as the print version.

Even though Mr Colman now concedes he was wrong and they were right, he is not repentant. "We could have kept going, but I don't think we would ever change this culture of the Internet where everyone expects information for free. And I really don't want to be in the business of just selling advertising to support the site."

But why not? Many print publications - including Colman's own Property Press - are delivered to readers free and survive very well on advertising revenue.

Mr Colman acknowledges the decision to shut down the site was also influenced by a decline in advertising sales and, ironically, increased operational costs due to a surge in traffic.

"The sponsorship advertising was down about $200,000, but we still had $650,000 in contract advertising, which doesn't include the casual advertising that was coming in from agencies."

From day one, NBR took a unique approach to selling banner advertising on the site. Unlike other sites such as Xtra that sold banners based on the number of times the advertisement was viewed (per impression), NBR sold annual sponsorships.

Blue chip companies such as Air New Zealand, ASB Bank and BellSouth took prominent positions on the site for a year and also got their logo attached to a weekly column in NBR's print product.

Initially the strategy was highly successful. A dozen pre-sold sponsorships starting at $25,000 each enabled NBR to bank on close to $1 million in first year of operation - before it had even begun building its site. But later, the strategy backfired.

With key advertising positions already snared, new advertisers found it difficult to get good exposure. The net effect was that advertising sales revenue failed to grow.

NBR tried to address the problem, as well as criticism that the site was difficult to navigate, with a makeover in August 1997. The new design was a dog's breakfast - a home page peppered with sponsorship messages, a rolling news ticker and numerous animated advertisements that drowned out the news content.

The change did make space for new advertisers, but at a cost.

As one Net surfer commented last week in the NBR online forums: "The main reason I didn't use the site was because of the advertising dominance. It was so hard to locate the real information when all the graphics were flashing and popping all over the place. The very busy feel to the front pages was a real turn off."

NBR was clearly a pioneer in Web-based publishing and for those who did wade through the site's clumsy hierarchical structure there was an enormous archival resource which, as well as NBR and its other publications, included Reuters, Dow Jones, IRN, NZPA, and foreign exchange, stock market, sport and weather news information

It was also ground-breaking in its direct e-mail and messaging services, providing automatic searches with e-mail, pager, fax and phone alerts to users. Unfortunately, because of the high subscription costs, hardly anyone saw the benefits.

The site's architect, brother Graeme Colman, relished the new frontier where anything goes - experimenting with direct e-mail special offers to registered users and also selling key words in news articles such as "transport" and "racing" hotlinked back to car maker Ford's local Web site.

But while the site was innovative, NBR was slow to read the rapidly changing Net market and modify its content and advertising charging regimes. Many of the early sponsors departed and replacements were getting harder to find.


"In the last six months sponsorships dropped off and the other sites were charging very, very small amounts for advertising space."

The site also gave mixed messages about its traffic statistics, initially trumpeting massive hit rates and page views instead of the more meaningful individual user sessions.

Unlike Xtra, it never submitted to an online audit and even on closure claims a meaningless 100,000 "customers" rather than giving an average daily or monthly number of visitors, which was believed to be a quite respectable 2000 a day.

But it is also clear the site was beginning to get more usage - as evidenced by a projected fourfold increase in traffic costs to $80,000 a year.

"The more successful it became the higher the traffic costs - and if that couldn't be upgraded into information sales then my call was that there really wasn't a future in terms of making good profits."

So how did the site revenues and costs stack up? Running costs, including data feed management from Clearview, are believed to have been about $300,000 a year. Add in three salaries for the manager, content and sales staff and it appears than even on about $700,000 sales the site would still be in some profit.

Mr Colman's decision is difficult to understand because the site was on the verge of changing to a per-impression advertising model and about to install a new advertising management system. There were also plans to expand into data wholesaling of its information, providing packaged news feed of its content to company intranet sites.

The Vodafone Upd@te service, which provided IRN headline news, sports and share messages to users' cellphones, was also gathering momentum, with around 400 registered users.

NBR is negotiating with Vodafone to continue providing the service but with no Web site for the IRN feed, it is hard to see what NBR's role could be. Other problems have yet to be resolved too. Much of the hardware and software for the site was provided under sponsorship agreements with Microsoft and Digital (now Compaq). With the site closed the sponsors may want some recompense.

Mr Colman is a self-confessed Luddite when it comes to the Net - preferring the telephone, handwritten memos and the fax machine rather than email or surfing the Web. But he's not totally against the medium.

"My philosophy is that the Internet is an absolutely amazing way of getting data from anywhere in the world instantly. But when it comes to learning, people use print media."

In the Colman perspective, reading from paper is still the "supreme way of getting information." People look at a screen to get data, not to make "learning decisions," which only comes from print products.

"I don't know why it is , but they want to hold it [information and analysis] in their hands and at their convenience, away from their desk sit back and read it."

Many will agree with Mr Colman's point of view. But many will wonder how one could squander such an extraordinary Web opportunity.

* Disclosure: Chris Barton was NBR's Web site content manager from April 1996 to April 1997.

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